Job Flight: Is It Real?

By

Gene Epstein

Aug. 11, 2003 12:01 a.m. ET

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"TWO PLUS TWO EQUALS 5," Winston Smith writes in the dust with his finger in George Orwell's 1984. It's one among several dicta handed down from Big Brother that Smith must learn to accept. In my own version of the book's sequel, The Economy Strikes Back, that one would do quite nicely. But another piece of Orwellian anti-wisdom, "Freedom Is Slavery," would be updated to "Free Trade Is Slave Trade," while "War Is Peace" would have to be rendered, "Trade Wars Are Peaceful."

Add to the mix, "Productivity = Job Loss," "Hire Native, Fire Foreign," "You Can't Export Too Much, or Import too Little," "Markets Fail, Government Gets an 'A' for Effort," and the one that's really key, "Employment Is Our Most Important Product," or in its shorthand version, "Make Jobs, Not Goods."

Then, voila: the Eight Great Principles that encapsulate the economic wisdom of our times, guiding the actions of our leaders, informing the reportage of our media -- and gracing the nation's T-shirts and bumper-stickers in spirit, if not in fact.

OK, I exaggerate terribly. But consider how a fragile forecast about jobs "moving" abroad recently got morphed into solid prophecy: "In the next 15 years, American employers will move about 3.3 million white-collar jobs and $136 billion in wages abroad, according to Forester Research." (USA Today, Aug. 5.)

Into a social problem: "Critics worry that such moves will end up doing more harm to the American economy than good." (The New York Times, July 22.)

And into the concern of politicians: "Lawmakers in New Jersey, Maryland and three other states have proposed legislation forbidding companies from shifting work on government contracts abroad." (Fortune, June 23.)

Legislators have also been schooled in one of life's cruel truths: Foreign workers do not pay taxes; only resident workers do. And better to be safe than sorry ...

They must be thankful the media have stirred up fear of those 3.3 million foreigners eager to serve us for chump change. Other publications that have devoted ample space to this story include Time (Aug. 4), Newsweek (Aug. 11), The Wall Street Journal (July 16), the Miami Herald (July 21) and others too numerous to mention.

As attorney Vincent Bugliosi once quipped, people listen to the music of evidence and argument, but skip the lyrics; and with this array of voices, the rest of us will be eager to keep the rhythm.

Now back to the beginning.

First, it takes a sense of humor to make a forecast of this kind without adding that the range of error around that 3.3 million is plus or minus 90%.

My gosh, these are jobs tied in one way or another to information technology (IT), the economy's most innovative sector. Who knows whether five years from now half the slots Forrester Research expects to bid goodbye will even exist. And who can tell what new jobs might come into being that foil "main factor" No. 2 in the Forrester Research methodology statement, "the availability of the skills offshore," or factor No. 3, "the degree to which technology/automation support the underlying business processes of the job."

Also, no one knows whether the export of white-collar jobs has moved into high gear, because the data aren't available. For one thing, this kind of white-collar flight is hardly new. The New York Times article bore the unintentionally funny headline "IBM Explores Shift of Some Jobs Overseas," which might as well have read, "New Yorkers Explore Shift of Some Folks to Brooklyn."

The Times neglected to mention that 57% of IBM jobs -- 179,000 positions in all -- are already overseas, according to company spokesman Joe Stunkard. He adds that IBM began employing residents of India in 1951 and of China in 1979.

If the outflow really is going gangbusters right now, you wouldn't know it from the available data. Despite the bad job market, the number of folks employed in managerial and professional positions has risen by 1.5 million since 2000, to 47.2 million. (And no, it doesn't appear that many of them are lately "self-employed.") Their unemployment rate is now at 3.7%, compared with 7.5% for the rest of the labor force.

But OK, what if these made-up stories turn out to be true, anyway? Terrific news. One thing you can forecast with reasonable accuracy is the size and composition of the labor force 10-20 years out. According to projections by the Bureau of Labor Statistics, between 2010 and 2020 the number of workers in the prime-age years of 25-54 will stay absolutely flat, at about 105 million. This simply can't happen in a growing economy, and it's why I have predicted a flood of immigration over that decade ("The New Melting Pot," Sept. 2, 2002).

There's an even better solution, however: a flood of offshore workers. And while 3.3 million ain't much, it's a start. Let's hope Big Brother allows it.

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